US Stocks Climb, Lifted By ISM, Construction Spending Data

KristinaPeterson

NEW YORK (MarketWatch) -- The U.S. stock market rose Monday, boosted by encouraging earnings reports and global economic data, but investors tread lightly ahead of major market events later in the week.

The Dow Jones Industrial Average rose 113 points, or 1%, to 11231. Technology companies gained after the Semiconductor Industry Association said global chip sales rose 2.9% in September from a month earlier. Intel climbed 2.7%, while Microsoft gained 1.9% and Cisco rose 1.7%.

While stocks got a boost from a round of better-than-expected economic reports on Monday, traders' focus is locked on events later this week, including the results of Tuesday's midterm elections and Wednesday's conclusion of a meeting of the U.S. Federal Reserve's policy-making committee. The stock market has rallied since early September and on Friday wrapped up its best October performance since 2003 for the Standard & Poor's 500-share index, largely on expectations that the Fed will resume purchasing bonds in order to stimulate the economy. Now some are worrying that the high level of anticipation going into the week's events could lead to disappointment if the size or scope of the Fed's expected announcement fails to match the market's expectations.

While an immediate sell-off is possible, "any kind of correction and or pause is going to be short and shallow," said Jeff Saut, chief investment strategist at Raymond James. "There are still going to be very good earnings comparisons coming up."

Lifting stocks on Monday, the Institute of Supply Management's manufacturing purchasing managers' index increased to 56.9 last month, above expectations for a reading of 54.3, and construction spending unexpectedly climbed in September, its first gain in three months.

The Nasdaq Composite gained 0.8% to 2529. The S&P 500 rose 0.9% to 1194, led by its energy and industrial sectors.

Boosting energy stocks, Baker Hughes surged 6.1% after its third-quarter earnings soared as the oilfield-services company benefited from a rebound in North America, a seasonal recovery in Canada and the April acquisition of BJ Services. Cabot Oil & Gas rose 6%, while Southwestern Energy gained 5.3%.

Adding to hopes for global economic growth, two measures of Chinese manufacturing data unexpectedly increased. A set of data from HSBC showed one of the biggest month-on-month increases since the index was launched in 2004.

In corporate news, Ambac Financial Group tumbled 41% after the bond insurer warned that its board declined to make an interest payment and said it is negotiating plans for a prepackaged bankruptcy proceeding with senior debtholders. If it can't reach an agreement for such a plan, it plans to file for Chapter 11 bankruptcy protection by the end of the year.

U.S.-listed shares of BHP Billiton rose 1.8% as its $39 billion hostile bid for Potash Corp. of Saskatchewan is back in the spotlight after London's Sunday Times newspaper reported that the mining giant is considering lifting its bid by 10%. Shares of Potash edged up 0.3%.

Among stocks reporting earnings, IntercontinentalExchange slipped 0.5% even as its third-quarter earnings rose 10% on record trade on its U.S. futures markets and a rebound in energy trading.

Corning rose 1.2% after its third-quarter profit jumped 22%, boosted by higher sales and margins, though its results just missed analysts' expectations. Corning, one of the leading providers of glass used in LCD screens for electronics, said it expects glass prices to fall slightly in the fourth quarter due to ample supply.

Humana firmed 1.1% after its third-quarter profit rose 30% as revenue rose on increases in enrollment. Humana, one of the nation's biggest providers of privately-run Medicare Advantage health plans for seniors, also lifted its outlook for the year.

In other U.S. economic data, consumer spending rose 0.2% in September, the Commerce Department said. Americans' incomes fell 0.1% in September, the first decline in incomes since July 2009. Economists had forecast spending would climb 0.4% in September and that incomes would increase 0.2%.

The U.S. dollar strengthened against both the euro and the yen. The euro was recently trading at $1.3888, down from $1.3947 late Friday in New York.

Demand for Treasurys was mixed, with the two-year note down and the 10-year note flat, pushing its yield to 2.60%. Crude-oil prices rose above $83 a barrel, while gold futures declined.

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